Christie Todd Whitman on Tax Reform

Former Director of the E.P.A (Pres. Bush Cabinet); Former Republican Governor (NJ)

People need certainty that taxes won't be raised

Q: People are fed up with the big spending. They're very worried about the deficit. And they are saying you have got to start putting some limits on this ever-expanding federal government. But they are not saying walk away from government. They're not
saying do nothing. They are saying actually what really gets them upset is we are not seeing the big issues being addressed. Look at this bill...

A: No. It's almost 2,000 pages.

Q: Two thousand pages. There's $8 billion worth of nonsense in this, a
small part of the $1.1 trillion that this deficit represents.

A: Right.

Q: But what do you think should happen to the $8 billion of all the other goodies?

A: Well, I wish they had not put them in. And Republicans are behaving just as badly as
Democrats in getting the pork into this bill. But, overall, we need those tax cuts. People need the certainty that they are going to see that they're not have their taxes raised. So, that is the most important thing.

Reduced state income tax by 30%

The average property tax levy increase for the Whitman administration, during which a 30% income tax reduction was enacted, is 3.9 %.
During the previous administration, when a record state income tax increase was enacted, the property tax levy rose by an average of 5.4%.

Source: NJ Governor’s web site, “By the Numbers”
, Jan 1, 2001

Cut business taxes and other taxes

[Governor Whitman’s tax] cuts have accounted for a cumulative total of $11 billion in savings to New Jerseyans and include:

Veterans’ Deduction - Supported passage of a constitutional amendment increasing the property tax deduction on personal
income taxes for veterans from $50 to $250 over four years.

Business Tax Cuts - Enacted a series of business tax cuts that has stimulated the economy and will assure the continuation of existing jobs and the creation of new jobs.

Energy Tax Reform - Cut energy taxes for every utility customer by 45% over a five-year period beginning in 1999.

Small Business Tax - Enacted the region’s lowest corporate tax rate for small business.

Cut NJ taxes by 30%; zero taxes for 380,000 poor

[Governor Whitman’s tax cuts] include:

30% Tax Cut - Cut the state income tax three times to fulfill the promise to cut taxes 30% for most New Jerseyans in three installments.

Off the Tax Rolls- Eliminated state income taxes altogether for
380,000 New Jerseyans earning $7,500 or less. Signed plan to eliminate state income taxes for another 320,000 New Jerseyans earning up to $20,000, phased in over three years.

Taxpayers should benefit first and most from budget surplus

The first recipients of our prosperity dividend must be the taxpayers. We must never forget that government revenues are taxpayers’ dollars. That’s why this budget contains nearly half-a-billion dollars in new money for tax cuts. That includes almost
$200 million more in direct property tax relief. My budget also includes $130 million to relieve workers of unemployment insurance contribution for the next two years, and $130 million to lower the unemployment tax rate on employers.

Source: Speech on FY2001 Budget to NJ Legislature
, Jan 24, 2000

No national sales tax or VAT.

Whitman adopted the National Governors Association policy:

State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.

National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.

Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.

Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.

Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.